EXCLUSIVE 2ND UPDATE, 4:30 PM: I have just confirmed with Sacha Baron Cohen’s publicist that the comedian will walk on the Red Carpet in character as The Dictator and then attend the Oscars show. He’ll do it with the full approval of the Academy Of Motion Picture Arts & Sciences which initially pulled his tickets and banned him from the 84th Academy Awards being held on Sunday evening.

EXCLUSIVE UPDATE 3:30 PM: Here is how Sacha Baron Cohen, in character as The Dictator, just responded to the Red Carpet and Oscars invite from the Academy Of Motion Picture Arts & Sciences which earlier this week had banned him the 84th Academy Awards:

“VICTORY IS OURS! Today the Mighty Nation of Wadiya triumphed over the Zionist snakes of Hollywood. Evil and all those who made Satan their protector were vanquished and driven into the Pacific Sea. What I am trying to say here is that the Academy have surrendered and sent over two tickets and a parking pass! TODAY OSCAR, TOMORROW OBAMA!”

EXCLUSIVE 3PM: I can confirm that the Academy Of Motion Picture Arts & Sciences has reversed course and now invited Sacha Baron Cohen to stage his movie publicity stunt on the Red Carpet and then attend the Oscars show. “Does Sacha need a changing room?” the Academy in a conciliatory tone asked one of the actor’s reps today.

Baron Cohen had planned to walk the Red Carpet in character as Middle Eastern General Alladeen and then change into a tuxedo to attend the awards show as himself as part of Paramount’s contingent for Best Picture contender Hugo. (Baron Cohen has a showy role in it.) Paramount, the studio behind The Dictator, tells me that Baron Cohen has not yet decided to go. Others like Oscars telecast producer Brian Grazer and Academy President Tom Sherak are telling media that the comedian is attending and even part of the show. Which begs the question whether the Academy helped orchestrate this publicity stunt with Baron Cohen and Paramount all along. After all, Sherak is a paid marketing consultant for — you guessed it — Paramount.

The studio today denied this was a set-up and claimed to me that the Academy “relented because of all the bad publicity you generated for them to lighten up”. Also Sherak at one point called to “threaten” Baron Cohen’s agency WME, according to an insider who said, “He said this was bad for the Academy and we had to stop Sacha from doing this.” And Baron Cohen’s publicist Matt Labov just explained to me: “The Academy caught wind of our idea and pulled his tickets. They went to war with us, made threats, got embarrassed, panicked, and reversed their position only after the press backlash portrayed them as stodgy. Plain and simple, that’s how it happened.”

But that doesn’t jibe with, for days now, Academy Awards insiders have been saying privately that not only is Baron Cohen coming to the show but also will be featured. Tom Sherak told Good Day LA on Thursday morning that Baron Cohen will be at the Oscars. And Grazer told USA Today: “He’s coming. In fact, he’s even part of the, there’s a piece — he’s part of the show… as himself.” (“He’s in a few of the clip packages for Hugo,” an insider tells me. “I think that’s what Grazer is referencing.” Others tell me Baron Cohen is also one of telecast’s vignettes directed by Moneyball‘s Bennett Miller featuring actors and filmmakers talking about their love of movies.)

This publicity stunt for Baron Cohen’s movie and presumably also Oscars show ratings may backfire on the Academy. Because Sacha in character publicly described, no matter how humorously, the Academy of Motion Picture “Arts & Zionists”. Not only is this a Muslim-Jew issue. But Baron Cohen also fired up the hot button issue of Hollywood and Jews. Let me just say that, because of this, Deadline Hollywood received many anti-Semitic comments about showbiz. (We deleted these comments on the grounds they were disgusting.)

Baron Cohen was banned from attending the Oscars even though he is an Academy member and one of the stars from Hugo, Paramount’s 11-nominated movie and Best Picture contender. “Unless they’re assured that nothing entertaining is going to happen on the Red Carpet, the Academy is not admitting Sacha Baron Cohen to the show,” Paramount told me at the time. The Academy’s Managing Director Of Membership Kimberly Rouch phoned Paramont’s awards staff to say that Baron Cohen’s tickets had been pulled unless he gives the Academy assurances ahead of time promising not to show up on the Red Carpet in costume and not to promote the movie on the Red Carpet. The Academy made it clear that, without those assurances, it would not issue him the tickets. Of course, the next best thing to that publicity stunt is all the media coverage which this ban generated for Baron Cohen’s film.

The Academy looked like uptight wankers with this treatment of one of the globe’s funniest comedians. The Academy merely had to say no when that proposal was presented to it. Hollywood considers the Oscars its most prestigious event and apparently wanted another overly long, ridiculously reverential show about movies no one bothered to see where the best thing will be the comeback of Billy Crystal at age 63.

The Dictator is a spoof about the “heroic story of a Middle Eastern dictator who risks his life to ensure that democracy never comes to the country he so lovingly oppressed”. Whether the fact that the 84th Academy Awards will be beamed into 200 countries, including the Middle East, had anything to do with this ban is unclear. But it is highly unusual for the Academy to pull a member’s tickets. An Oscars spokesperson acknowledged to Deadline at the time: ”We would hope that every studio knows that this is a bad idea. The Red Carpet is not about stunting.” Oh really? Then why did Trey Parker and Matt Stone of South Park crossdress down the Red Carpet as J-Lo and Gwyneth Paltrow in evening gowns in 2000? Or Ben Stiller appear as an Oscar presenter in full blue Avatar makeup and hair in 2010?

Baron Cohen wasn’t scheduled to present an award, but he was arriving at the Kodak Theatre as part of the Paramount contingent for Best Picture nominee Hugo in which Baron Cohen plays the train station inspector of the movie about an orphan in 1930s Paris.

At the 2007 Oscars, Baron Cohen was asked to be a presenter and said he would do it only if he could be in character as Borat. And Oscars’ Powers That Be said, “No way.” He didn’t attend. But this is the first time he has been officially banned from the show.

Purists feel that the Oscars is no place for such in your face promotion. The Academy hasn’t even allowed movies to be advertised during the Oscarcast, until this year. Then again, these Oscars have very little suspense because it’s a forgone conclusion that many of the winners of the marquee categories are already known and The Artist will win Best Picture. The prospect of Baron Cohen’s Red Carpet walk was the closest thing to drama.

This would not have been Baron Cohen’s first time upstaging an awards show. To promote Bruno, he flew through the air at the MTV Movie Awards and landed with his crotch in the face of Eminem, who later admitted the stunt was rehearsed. And a trailer for The Dictator certainly was one of the raciest ever allowed by the MPAA during the Super Bowl, where Baron Cohen’s character was hilariously depicted running a competitive race while and leg-shooting rivals with a starter pistol as they got close to him.